State Pension Woes: Not as Bad as They Seem?

April 11, 2011By Sean Cavanagh

Demanding that teachers and other public workers pay more for pension benefits might score elected officials some easy political points, but it won't fix states' budget woes, argues the author of a recent essay.

The source of that opinion might surprise you. It was written by Eli Lehrer, the vice president of of the Heartland Institute, a conservative think tank. A lot of the efforts today to require higher pension contributions of workers, though not all, are being pushed by Republican governors and lawmakers.

Lehrer, in an essay written late last month (I'm only getting to it now) looks at efforts in Illinois and other states and concludes that many of the fears of pension-related budget calamities—and the supposed benefits of reducing the generosity of those systems—are overstated.

Despite fears about the yearly costs and unfunded liabilities of pension systems, he notes, those retirement systems make up a relatively small share of state spending—2.9 percent of expenditures, by one estimate. Read the full article here.